© Reuters. FILE PHOTO: Bank of England Deputy Governor for Markets and Banking Dave Ramsden attends the Monetary Policy Report Press Conference at The Bank of England, in London, Britain November 4, 2021. Justin Tallis/Pool via REUTERS
LONDON (Reuters) -The Bank of England will have to push borrowing costs higher to control fast-rising inflation and there are risks that inflation pressures from rising wages will prove stronger than the BoE thinks, Deputy Governor Dave Ramsden told Bloomberg News.
“I don’t think we’ve gone far enough yet on Bank Rate, but I do think that what we’ve already done is having an impact,” he said in an interview published on Thursday.
Last week the BoE raised Bank Rate to 1.0%, its highest since 2009, and said further increases “may still be appropriate in the coming months” as it forecast that inflation was likely to go above 10% later this year, possibly causing a recession.
“Given what we know about the UK labour market, I wouldn’t be surprised if it turned out to be a bit tighter,” Ramsden said. “I think there are upside risks on inflation (in) the medium term.”
He also said he assumed the BoE would handle the process of selling government bonds as it reverses its quantitative easing programme, not the Debt Management Office.
BoE is not yet done with rate hikes, Ramsden says